Assessment of Public Comments for the Adoption of 11 NYCRR Part 30 (Regulation 194)

Insurance producers generally receive compensation
from insurers or other producers by one of two types of methods. The first is a flat
percentage commission based on premium volume, paid at the time of sale. There may be
different flat rates paid for new and renewal business. The second is a contingent
commission, which may be paid in addition to flat percentage commissions, and which
typically is based on profit, volume, retention, and/or business growth. Contingent
commissions are not payable on a per policy basis, but are allocated based on the
performance of the entire portfolio of business placed with a particular insurer. The
contingent commission schedule is known to producers at the beginning of a given period of
time (usually one year), but contingent commissions actually earned are calculated some
period after business is placed and loss experience is observed. The amount of
compensation paid may also vary from producer to producer, depending upon the relationship
between the producer and the insurer or other producer, though the compensation paid
usually will not change the actual premium to the consumer.

Defenders of incentive-based producer compensation
argue that competition in the marketplace can address any conflicts because consumers can
comparison shop among producers. Producers that do not offer insurance providing the best
combination of coverage, service and price will lose business to those that do. However,
consumer representatives emphasized in discussions with the New York State Insurance
Department that consumers who purchase insurance through an insurance producer may not
comparison shop for the most favorable coverage, service and price because they are often
encouraged to rely on the producer to comparison shop the market for them.

From 2005 to 2007, the Attorney General and the
Superintendent entered into enforcement settlement agreements and regulatory stipulations
concerning allegations of improper steering in response to incentive-based compensation
with a number of major brokers and insurers. In response to the New York investigation,
the National Association of Insurance Commissioners in 2004 amended its Producer Licensing
Model Act to include requirements that brokers (but not agents) disclose compensation to
purchasers. The New York Insurance Department also circulated a draft disclosure
regulation in 2007. The work done on that draft and the comments received have been
incorporated into the current draft.

In July 2008, the New York State Insurance
Department, in tandem with the Attorney Generals Office, held public hearings in
Buffalo, Albany and New York City and conducted extensive outreach to consumer groups,
industry and other stakeholders for more than a year. The Department has publicly exposed
two informal draft regulations (in January 2009 and July 2009) and sought comment on each.
The Department has also held six "working group" meetings with stakeholders in
various lines of insurance and dozens of other formal and informal meetings and phone
calls with consumer and industry representatives. Through this process, the Department has
considered a number of different courses of action including (1) banning or limiting
certain types of producer compensation; (2) full disclosure of all producer compensation
for every insurance transaction; (3) requiring disclosure only for producers who are paid
directly by the purchaser and by the insurer; (4) requiring disclosure of producer
compensation only upon the request of the purchaser; (5) requiring that producers disclose
only their role in the transaction and the source of their compensation with no disclosure
of the compensation amount; and (6) taking no regulatory action and/or promoting voluntary
disclosure of compensation by producers.

After this exhaustive process, the Department has
determined that this final draft regulation hereby adopted is the best way to ensure that
consumers better understand the role that insurance producers play in the insurance
transaction, the compensation those producers receive, and any potential conflicts of
interest that may arise as a result, while imposing as little cost as necessary on the
producers and insurers. On November 12, 2009, the Department received approval from the
Governors Office of Regulatory Reform to proceed with a proposed regulation. The
proposed rule was published in the State Register on December 2, 2009, and the 45-day
public comment period expired on January 16, 2010.

A summary of the comments provided to the Department
in response to the: (1) July 2008 public hearings; (2) January 2009 informal draft
regulation; and (3) July 2009 informal draft regulation, were previously included in the
regulatory impact statement for the proposed regulation, available online at www.ins.state.ny.us.

In response to publication of the proposed
regulation in the December 2, 2009 State Register, the Department received more than 2,200
comments. Many of the comments are from stakeholders that had commented previously and are
similar or identical in nature to those stakeholders previous comments. Below is a
summary of the comments provided to the Department by the various stakeholders. This
summary of comments focuses primarily on comments that have not been previously submitted
by the same stakeholder, and which, generally speaking, have not already been considered
by the Department.

More than 1,900 of the comments received were form
letters from members of the National Association of Insurance and Financial Advisors - New
York State (NAIFA-NYS). While these form letters support the language in the proposal,
which directs that the producer must disclose whether the producer represents the consumer
or the insurer, and that the producer will receive compensation from the selling insurer,
they question the need to reveal, upon request from the consumer, the amount of
compensation, since the limits on compensation are already set by the provisions of
Section 4228 of the Insurance Law. The letters also oppose the requirement, in the
proposal, that producers inform consumers that they may obtain specific information about
the producers' compensation, because such requirement would not be an effective deterrent
to a producer who is not acting in the best interests of his/her client. They also argue
that prompting the consumers in this way would distract consumers from more important
matters concerning the terms of the policy.

As discussed previously in the Regulatory Impact
Statement published on December 2, 2009, Section 4228 establishes a maximum level of
producer compensation for certain life insurance transactions. But that ceiling does not
eliminate the potential conflicts of interest that the proposal is designed to address,
because producers can still receive various types and levels of compensation from various
insurers. As also discussed previously, the Department believes that without the
"prompt" language set forth in Section 30.3(a)(4), consumers will have no way of
knowing that they have the right to additional information concerning a producers
compensation. While the Department agrees that policy terms and overall premium are more
important than producer compensation in most transactions, it is still important that
consumers understand the role and potential conflicts of interest of their intermediaries.
Therefore, no changes were made in response to these comments.

The Department also received more than 250 comments
from individual brokers and agents, most of them members of the Professional Insurance
Agents and the Independent Insurance Agents and Brokers of New York (collectively, the
"independent agents").

Most of these independent agents have commented that
the proposal will be burdensome and costly to small agencies and brokerages, which will
have to track and calculate compensation on a per policy basis. The proposal, however,
does not require such tracking or calculations. In most insurance transactions, producers
will simply provide consumers in general terms with a description of their role in the
transaction and the nature of how they are compensated. In a subset of transactions,
consumers will request more information, and the producer will in those instances have to
give a more detailed explanation of the factors that go into the compensation that the
producer receives based on the sale and the amount received. If the amount is not known at
the time, the producer can provide a reasonable estimate of what the amount may be, which
may be stated as a range of amounts or percentages. Thus, the costs of compliance with the
proposal have been minimized.

Many of the independent agents also argue that the
proposal only makes sense for brokers who collect fees from their clients, because other
consumers understand that the producer is getting paid by the insurer. As discussed more
fully in the previously published Regulatory Impact Statement, however, most consumers do
not understand the producers role in the transaction. In fact, many consumers are
told and often believe that the producer represents their interests. Therefore, the
Department continues to believe this proposal serves a vital need in the marketplace in
educating consumers. Accordingly, no changes were made in response to these comments.

A number of independent agents also have compared
insurance producers to sales people in other industries, including those who sell cars,
appliances and shoes. They argue that because these sales people do not have to disclose
their gross margins on every sale, similarly insurance producers should not have to
disclose their compensation. The Department believes that consumers of sophisticated
financial products like insurance are entitled to understand the role of the insurance
producer in the transaction, and request information relating to the compensation the
producer may receive. Accordingly, no changes were made in response to these comments.

Many independent agents also have insisted that the
proposal must apply to all agents and brokers, even those who work for so-called
"direct writers" (i.e., insurers who sell their products directly to the
public). Yet the proposal already applies to such agents and brokers. Therefore, no change
was required.

There are many independent agents who argue that the
definition of "compensation" in the proposal is too broad and may encompass
agent salaries. The substantive provisions of the proposal, however, refer to compensation
"based in whole or in part on the sale," and therefore clearly refer only to
commissions and other sales-based compensation. Therefore, no change was made in response
to these comments.

Many independent agents argue that they have rarely
had consumers request compensation information, and assert that the Department has few
documented complaints relating to producer compensation. The Department believes, however,
that few consumers inquire or complain because few are aware of producer compensation
structures and how they may create conflicts of interest for producers. Thus, no changes
were made in response to these comments.

A number of independent agents argue that stating
whether they represent the insurance consumer or insurer in a transaction is difficult
because in most instances there is at least some dual agency. The Department agrees that
producers may represent insurers for certain purposes like collecting premium, while at
the same time representing consumers for certain other purposes, particularly if the
producer has represented to the consumer that the producer is the consumers
"trusted choice" or that the producer will look after the consumers
interests. Therefore, the Department has changed the proposal, so that it now requires
that the producer provide an explanation of the producers role in the transaction
without a specific requirement that the producer state who he/she represents.

Finally, many independent agents complain that
applying the proposal to all renewals creates an undue compliance burden, because many
renewals are automatic and involve minimal contact between the producer and the consumer.
The Department agrees with the independent agents on this issue and has largely excepted
renewals from the final version of the proposal. The only remaining requirement concerning
renewals is that if the consumer affirmatively requests information about the
producers compensation within 30 days of renewal, the producer must provide the
information.

Trade associations comprised of financial advisors
and life underwriters submitted a joint letter, on behalf of life insurance agents. The
commenters state that the marketplace for life insurance, disability insurance and
annuities is much different than the property and casualty marketplace, where the
Department and the Attorney General investigation found most of the problems concerning
incentive-based compensation. The commenters request that life insurance products be
removed from the scope of the proposal or, alternatively, that disclosure consist only of
notification to consumers explaining that producers represent insurers in selling
insurance and receive compensation based upon sales. The commenters argue that, in any
event, the proposal would not effectively deter a producer who is not acting in the best
interests of his/her client.

As discussed previously in the published Regulatory
Impact Statement, deterring misconduct by producers is only one goal of the regulation.
The regulation is also designed to make sure consumers are fully informed about the nature
of the producers compensation and any potential conflicts of interest that may arise
therefrom. There will always be regulated persons who decide to break the law, but that is
not an argument against prudent regulations that achieve an important purpose. Nor are the
conflicts that arise from incentive-based compensation limited to the property and
casualty marketplace alone. Those conflicts are no less present in the life insurance
marketplace. The Department has considered the uniqueness of life insurance products, as
well as the potential difficulties life insurers and producers will have in complying with
the regulation. However, the Department has determined that the goal of making producer
compensation transparent to insurance consumers outweighs these concerns. In fact, in some
respects the regulation should be less burdensome for life insurance producers who are
already under legal obligations to make disclosures that in some instances are more
extensive than what this regulation requires. Accordingly, no changes were made to the
proposal in response to these comments.

One property and casualty insurer commented that
direct writers should not have to provide disclosure because consumers understand that the
insurers direct sales representatives (DSRs) are working for the insurer. The
insurer argues that due to its corporate structure, all New York DSRs are licensed
as agents but they do not receive compensation based on the sale of an insurance contract.

DSRs are covered by the regulation to the extent
that their sales people are required to be licensed producers, and any salesperson who
receives any type of compensation (including year-end bonuses) based in whole or in part
on the sale of insurance policies must be licensed. Therefore, the only DSR employees who
are not covered by the regulation are those who receive only a straight salary and no
compensation based in whole or in part on sales.

The Department has addressed the insurers
concerns in part by providing an exception for insurance company employees who are not
acting as insurance producers, i.e., are not receiving incentive-based compensation. The
Department has decided it is important for the rule to apply equally to all persons acting
as licensed insurance producers.

One life insurer supports compensation disclosure,
including the provisions requiring a producer to disclose: who it represents; how it will
be compensated; and that compensation varies among insurers and different insurance
contracts. The insurer supports general disclosure explaining the relationship between the
producer and the insurer, but not detailed financial information about compensation
structures. The insurer argues that the requirements relating to disclosure of
compensation structures will create confusion for consumers and undermine fair competition
among insurers. In addition, the insurer opposes the requirement that producers inform
customers that they may obtain specific information about the producers' compensation,
claiming it would misdirect the consumers focus to the amount of compensation to be
received by the producer, and away from the benefits and attributes of the product being
considered, and the company standing behind it.

There is nothing in the regulation that requires
insurers or producers to disclose their "compensation structures." The only
requirement is that producers disclose the amount of compensation, if known, along with a
general description of the factors that may lead to further compensation and a reasonable
estimate of the amount of such further compensation. As previously discussed in the
Regulatory Impact Statement, there is no reason for compensation to "distract"
consumers from other matters. The Department envisions the required disclosure to be just
one aspect of the oral and/or written sales presentation made by producers.

A trade association of health plans resubmitted
comments that were made in March, 2009, and to which the Department previously responded
in the Regulatory Impact Statement published on December 2, 2009.

The trade association of health plans comments that
employees of health plans should not be subject to the proposal. The trade association of
health plans also objects to a definition of purchaser that includes certificate holders
in health plans who do not select the coverage. The trade association of health plans also
criticizes the broad definition of compensation included in the proposal and points out
that such definition would include even de minimus items. In response to these comments,
the Department has clarified that employees of insurers who do not receive incentive-based
compensation (and are therefore not licensed producers) are exempt from the proposal. The
Department has also narrowed the circumstances in which certificate holders would be
defined as purchasers to instances where the producer has "sales or
solicitation" contact with certificate holders, and further narrowed the final
version of the regulation to require disclosure only when the certificate holder pays all
of the premium. Finally, the Department has excepted certain de minimus items of
compensation from the proposal.

An association of independent insurance agents and
brokers maintains that there is no documented need for this proposal, which will not
address the types of behavior that created the perceived need  i.e., the illegal
activities of a few mega-brokers that were brought to light by then - Attorney General
Spitzer. The association argues that it has strongly advocated for voluntary disclosure of
compensation when requested by the consumer and continues to support a voluntary approach
to transparency. The association also argues that the costs of compliance with the
proposal will create a burden for insurance producers, many of whom are small businesses,
and that over time the additional costs to implement this proposal will be shifted back to
the consumer in the form of higher premiums. The association also suggests, among other
things, that the definition of "compensation" in the proposal be narrowed.
Finally, the association proposes that the "exceptions" provision of the
proposal be eliminated so that the requirements will equally apply to all insurance
transactions and the licensed producers who conduct those transactions.

The associations complaints about the lack of
need for the regulation are already addressed above. In addition, as discussed in the
previously published Regulatory Impact Statement, the investigations by the New York
Insurance Department and the New York Attorney General in 2004-2007 into major insurance
companies documented steering misconduct by small and medium size brokers, as well as
independent agents. Moreover, insurers pay commissions, contingent commissions and other
incentives in order to affect producer behavior, and such incentives create potential
conflicts. At the very least, insurance consumers are entitled to some level of disclosure
of those potential conflicts, particularly when the insurance producer holds himself or
herself out as the consumers "trusted choice."

The Department addressed the associations
concerns about the costs of compliance by moving to the two-step disclosure process 
i.e., disclosure of role, followed by more specific compensation-related information upon
request  that the association itself proposed. As discussed elsewhere, the
"broad" definition the association is concerned about is only used in the
context of compensation "based in whole or in part on the sale" throughout the
regulation. Finally, the regulation applies equally to all licensed producers who are
acting in a producer capacity in the transaction.

Another trade association of independent insurance
agents and brokers argues, among other things, that the requirement that an agent and
broker disclose whether he/she "represents the purchaser or the insurer for purposes
of the sale" creates precarious legal landmines for the thousands of small businesses
who sell insurance products in New York State. The association believes that the question
of who a producer represents in a particular transaction is often complex, and the answer
to this inquiry will always be fact-intensive and transaction-specific. The association is
troubled by the fact that the proposal does not apply equally to all insurance producers,
and certain categories of transactions and producers are exempted altogether from its
application. The association strongly objects to the creation of this unlevel playing
field and urges the Department to eliminate this disparity. The association also states
that the proposal requires, in cases of "supplemental" disclosure made in
response to the consumers request, agents and brokers to disclose greater
information than what is actually requested by the consumer. The association urges the
Department to revise the proposal to clarify that a producer is not required to make
supplemental disclosures concerning subject matter not requested by the consumer. The
association also argues that requiring a producer to provide information concerning all
alternative quotes "obtained" is onerous and would require producers to develop
detailed insurance policy abstracts that compare and contrast the various terms of
coverage. The association urges the Department to eliminate that requirement as it relates
to the mandated production of information concerning coverage. Finally, the association
recommends that the Department exempt renewals from the scope of this proposal, and notes
that a consumer renewing a policy will have already received disclosure statements and
will retain the ability to request and obtain additional information from the producer.

As noted above, the Department is sensitive to the
associations concern that requiring producers to make a statement as to who they
represent may require the producer to draw a difficult legal conclusion. Therefore, the
Department has changed the initial role disclosure to require producers to simply describe
their role in the transaction.

The Department has considered the associations
concern that the proposal requires producers to give the consumer more information than he
or she has requested. Given that a consumer may make the request orally and in a number of
different ways, the Department feels it is important that every consumer who expresses an
interest in such information be provided with a full written disclosure prior to issuance
of the insurance contract. The insurance producer is free to explain the compensation
information orally and in an abbreviated form when the request is made.

The Department has already addressed the
associations concern about alternative quotes "obtained" by narrowing the
scope of the required disclosure to alternatives "presented."

As discussed elsewhere, the Department has addressed
the associations comment concerning renewals by exempting from the final regulation
renewals from the initial disclosure requirements.

A trade association of life insurers has argued,
among other things, that the proposal is duplicative of existing state and federal
statutes. In addition, the trade association of life insurers suggests that the proposal
exclude the amount of the compensation from the disclosure requirements. The trade
association of life insurers also opposes the requirement that producers disclose to
consumers that they have the right to request and obtain information regarding the nature,
amount and source of the producers compensation. The trade association of life
insurers would also like the proposal to be revised to acknowledge the uniqueness of life
products and argued that implementation and compliance will be particularly challenging
for life insurance producers.

As discussed in the previously published Regulatory
Impact Statement, the Department and the trade association of life insurers disagree about
the importance of the requirement that producers "prompt" consumers that they
may receive more information about the producers compensation. In the
Departments view, without such a requirement, consumers will have no way of knowing
that they have a right to such information. The Department has considered the uniqueness
of life insurance products, as well as the potential difficulties life insurers and
producers will have in complying with the regulation. However, the Department has
determined that the goal of making producer compensation transparent to insurance
consumers outweighs these concerns. In fact, in some respects the regulation should be
less burdensome for life insurance producers who are already under legal obligations to
make disclosures that in some instances are more extensive than what this regulation
requires. Accordingly, no changes were made to the proposal in response to these comments.

One property and casualty insurer has commented that
the proposal should exclude direct writers, including their employee sales
representatives, captive agents, exclusive agents and call centers. Alternatively, the
property and casualty insurer suggests that if the proposal is to be applied to those
parties, disclosure should be limited to "role disclosure" when insurance
options presented to a consumer do not have a materially different compensation structure
associated with them. The property and casualty insurer states that its sale compensation
structure is a trade secret. Finally, the property and casualty insurer suggests that,
among other things, the proposal be revised to: (1) indicate that requirements are
satisfied if the disclosure is provided at time of application in writing, even if policy
is bound before a consumer receives or signs a paper application; (2) require that
compensation be disclosed in general, rather than specific terms; (3) exclude from
disclosure referral fees earned when one producer refers business to another producer who
completes the sale; and (4) exclude flood insurance.

As discussed above, the Department has carefully
considered the arguments of DSRs and determined that it is important for the regulation to
apply equally to all insurance producers. The regulation as drafted does not require
disclosure of detailed compensation structures. The Department found no compelling reason
to exclude referral fees or flood insurance from the scope of the regulation. Therefore,
the Department has not changed the regulation in response to the insurers comments.
However, to the extent that the insurer or any other stakeholder has questions about
implementation of the regulation after its effective date, the Department is committed to
working to provide sufficient guidance in response to specific inquiries.

A trade association of property and casualty
insurers opines that, among other things, incentive-based compensation does not represent
an inherent conflict of interest between producers and their clients, and the Department
has failed to demonstrate the need for, or benefit of, the proposal. The trade association
argues that the definition of compensation should exclude "employees salaries,
benefits and expenses" and de minimus situations that involve total commissions or
other compensation less than $100. The trade association further argues that the proposal
should exclude direct writers and their representatives and agents. The trade association
also argues that the proposal should allow a producer to satisfy the disclosure
requirements by issuing one disclosure in situations where the producer provides multiple
quotes on different lines at the same time for the same insurer.

The Department has addressed almost all of the trade
associations concerns elsewhere in this assessment and in the previously published
Regulatory Impact Statement. Nothing in the regulation requires multiple disclosures for
multiple lines of coverage provided at the same time. Therefore, there is no need to
change the regulation in response to that comment by the trade association.

Another trade association representing the property
and casualty insurance industry argues that the regulation should exclude captive or
exclusive insurance agents. The Department finds that, like other insurance agents, many
captive insurance agents are permitted to place consumers with other insurers when their
appointed insurer does not provide the requested coverage. In addition, even in the
captive or exclusive agent context, incentives may vary from insurance product to
insurance product, thus creating the potential for conflicts. As noted above, the
Department has determined that the regulation should apply to all licensed insurance
agents and brokers. Therefore, no changes were made in response to these comments.

Another trade association of property and casualty
insurers argues that, among other things, disclosure requirements will adversely impact
insurers that use employees to sell insurance directly to the public and pay bonuses based
on sales because employees time spent not closing a sale will cost the insurer
money. The trade association argues that if the proposal does not exempt such employees,
it should exempt them from having to disclose their salary to people to whom they try to
sell insurance. Further, the trade association proposes that the definition of the term
"compensation" be modified to exclude an employees salary, and not require
an employee to disclose the exact amount of a bonus.

As discussed previously, throughout the regulation,
disclosure is limited to compensation "based in whole or in part on the sale."
Therefore, producer salaries are clearly excluded, and there is no reason to change the
language of the regulation in response to these comments. Furthermore, the regulation does
not require that the exact amount of an unknown bonus be disclosed. The requirement is
that the factors that go into a bonus, plus a reasonable estimate of what the bonus may be
(which may be stated as a range of amounts), be disclosed.

One trade association of insurance brokers repeats
many of the arguments it made in previous submissions to the Department including its
argument that the definition of "compensation" is too broad. The brokers
association also argues that the timing of disclosure should be placed on the actual
policy. The brokers association asserts that disclosure of the role of the producer in
transactions does not contemplate a producer acting as agent/broker in a single
transaction. The brokers association also comments that it supports a generic statement
that is general in nature concerning disclosure of the amount of compensation. The broker
association argues that alternative quotes may have the unintended consequence of
inhibiting consumer choice and competition, and that providing to consumers a description
of circumstances and reasonable estimates of value will only serve to distract consumers.
Further, the brokers association argues that the record retention requirements in the
regulation will be onerous on small businesses, and the penalties in the proposal should
only be assessed against willful violators, i.e., those who violate the requirements with
frequency as to indicate a pattern or general business practice.

The Department has addressed virtually all of the
broker associations concerns throughout the informal and formal comment periods, in
the previously published Regulatory Impact Statement, and in this assessment.
Nevertheless, based on the broker associations (and others) comments
concerning the record-keeping requirements, the Department has modified the regulation to
allow producers to enter into written agreements with insurers whereby the insurers keep
the required records. Furthermore, based on those concerns about the costs of record
keeping, the Department has eliminated the requirement that producers who elect to make an
oral disclosure to clients retain a certification that the oral disclosure was given in
addition to the follow-on written disclosure required by the regulation. The final
regulation requires only that the written disclosure documents be retained.

One life insurer comments that the proposal will
place an undue and expensive burden on life insurance producers because it does not take
into account the unique nature of life insurance transactions. The insurer further argues
that the proposal fails to recognize that New York and national requirements/limits
already exist for producer compensation disclosure. Finally, the insurer argues that the
proposal is vague, which will result in abuse and selective, discriminatory enforcement.
As discussed above and in the previously published Regulatory Impact Statement, the
Department considered compensation disclosure requirements in other states and the
standard promulgated by the NAIC and determined that such standards were inadequate to
provide transparency for New Yorks insurance purchasers. The remaining arguments
raised by the insurer also have been addressed in this assessment or elsewhere.
Accordingly, no changes were made in response to these comments.

An insurance agents group argues that compliance
with the disclosure and record retention requirements will impose cost and time burdens on
producers. The agents group also argues that the definition of "compensation" is
overly broad and should be confined to "commissions", and that the proposal
should define the term "material ownership".

As discussed previously in this assessment and
elsewhere, the Department has addressed the cost concerns of the agents group by modifying
the regulation to remove initial renewal disclosures from the regulation, allowing
producers to contract with insurers to meet record keeping requirements, and eliminating
the certification retention requirement. The agents groups other comments have been
addressed previously by the Department, or can be addressed through the implementation
process in response to specific inquiries.

Finally, representatives of a property and casualty
insurer argue that the proposal should not apply to travel insurance specifically or to
captive or employee insurance agents more generally. They assert that the same conflicts
of interest do not exist for agents who represent only one company and who only sell
products that do not compete with one another. The Department finds that, like other
insurance agents, many captive insurance agents are permitted to place consumers with
other insurers when their appointed insurer does not provide the requested coverage. In
addition, even in the captive or exclusive agent context, incentives may vary from
insurance product to insurance product, thus creating the potential for conflicts. As
noted above, the Department has determined that the regulation should apply to all
licensed insurance agents and brokers. Therefore, no changes were made in response to
these comments.